The Ottawa startup community is pulling itself up by its bootstraps.
© Joël Côté-Cright
Ian Graham of TheCodeFactory.
By Jacob Serebrin
Many of the city’s business incubators – typically office space where early stage startups can build businesses while surrounded by fellow entrepreneurs and experienced mentors who can provide advice and facilitate introductions to investors and clients – are growing in size and encouraging entrepreneurs to launch their businesses without outside funding.
“We want startups to self-capitalize,” says Bruce Firestone, executive director of Exploriem, an incubator for early stage firms. Mr. Firestone says he wants startups to develop a viable product and find customers before they start looking for funding from angel investors or venture capitalists.
It’s a message he’s drilled into the heads of entrepreneurs for more than 10 years and something he’s tried to build into the local startup culture through Exploriem’s annual Bootstrap Awards. Nominations are open to companies operating for fewer than seven years that have received less than $650,000 in outside funding.
Mr. Firestone isn’t alone. Bootstrapping is also a focus at TheCodeFactory, a downtown business incubator and co-working space.
“That’s definitely what we focus on,” says TheCodeFactory founder Ian Graham. “Our philosophy is build your business before you go looking for money.”
Blair Beckwith is the app store manager at local software firm Shopify and an organizer of Startup Weekend Ottawa, the local chapter of an international organization that puts on 54-hour competitions where teams develop new startup ideas. He says he sees two factors driving the self-funding push in Ottawa.
“We don’t have a lot of big investors; there are not many venture capitalists in Ottawa,” he says. Furthermore, he adds, the city currently lacks a critical mass of startups that are of the size or at the stage that typically attracts venture capitalists.
Scott Annan, who has founded several Ottawa-based startups and has been a mentor and investor in others, tells a similar story.
“There isn’t a larger fund in the city,” he says. “You have to leave or look externally.”
But he says he’s seeing other changes.
“Ottawa angels seem to be investing more,” says Mr. Annan, adding the city’s economic development agency, Invest Ottawa, is helping startups access funding.
Mr. Annan says he’d like to see investors be more selective and make larger investments in a smaller number of companies. He argues that investors should throw their full support behind a few firms with the best growth prospects, rather than spreading money around broadly.
Right now, he says, it’s like investors are “going to the casino and betting on everything.” However, Mr. Annan argues that raising the profile of Ottawa’s startup scene is even more important to the city’s long-term economic future. He says he’d like to see more efforts to promote companies in the city and to emphasize that those firms are succeeding “because of Ottawa, not in spite of Ottawa.”
The recent growth of the city’s business incubators and accelerators suggests there is fertile ground for local startups to grow. These facilities are an important part of the startup ecosystem, as access to office space can help entrepreneurs present a more professional face to potential investors and clients.
Last October, Exploriem moved to a larger facility at the Lee Valley Tools building on Morrison Drive. The new office has more than double the space of the incubator’s previous location and includes 24 work stations and several private offices.
TheCodeFactory moved to a bigger office earlier this year. The new space on Gloucester Street is roughly 25 per cent larger, Mr. Graham says, adding that TheCodeFactory now has 17 offices, up from six at its old Queen Street facility.
The move also represents an evolution of TheCodeFactory’s business model.
Unlike most of Ottawa’s other incubators and accelerators, TheCodeFactory is a for-profit company. Mr. Graham says it started as primarily a co-working space, but it has now become more of an incubator. That evolution will become more solidified in September, when TheCodeFactory launches a formal peer-to-peer learning program called G2S.
Over in Kanata, Wesley Clover – the private equity and investment management firm founded and chaired by local tech icon Terry Matthews – is also seeing strong growth at its startup incubator. The company’s vice-president for strategic marketing, Simon Gwatkin, says it has grown to the point that it’s “not so much an incubator anymore. Some of the companies now have 20 or 30 employees.”
However, even some of the city’s biggest boosters concede Ottawa still has ground to make up before it can be considered a hotbed of entrepreneurial activity.
As Mr. Beckwith bluntly puts it, “Ottawa is not a startup hub.” Compared with some other cities, “it’s a little harder in that you have to go looking for things,” he says. “If you’re just beginning to break into the scene, it’s a little daunting.”
Despite the recent growth of the city’s incubators, some argue more government support is needed to help build the next generation of tech companies.
“Ottawa’s startup community is significantly underfunded,” says Brent Mondoux, assistant director at Exploriem and CEO of NVisionIT Interactive.
As a result, many accelerator and incubator services “are either not provided or provided at a bare minimum, thereby limiting an entrepreneur’s chances for achieving sustained success,” he says.
“The world’s most successful accelerators and incubators have the financial backing from the government necessary to address these weaknesses. We don’t. This has got to change or we’ll continue to power the entrepreneurial grid with a handful of candles.”
Ottawa’s accelerators and incubators at a glance:
Not for profit
Startups are referred to the incubator by corporate sponsors and universities, boasts 85% success rate.
The Code Factory
Private, for profit
“Wallet-based admission” for startups, has facilitated the creation of more than 50 jobs.
Part of Invest Ottawa
On its third cohort of startups, acceleration program is 120 days long.
Wesley Clover Incubator
Private, part of Wesley Clover
Unlike other incubators, doesn’t accept applicants. Instead creates teams to solve market demands faced by affiliated companies. If they’re successful, startups will be spun off.
Lead to Win
Affiliated with Carleton University
Provides mentorship for three years, has a strong focus on supporting female entrepreneurs.
Founded: Ottawa branch opened in 2012
Non-profit, part of international network
Primarily a co-working space, but provides some incubator-like services. Has a strong focus on socially responsible enterprise.